Doing your taxes can feel overwhelming – even more so as a freelancer in Japan. However, once you know how, you’ll wonder why you were ever worried. In this article, we’ll take a look at:

1. The tax system in Japan
2. Required documents for freelance tax
3. Where to do your taxes
4. Other tips

1. The Tax System in Japan

The Japanese tax system can be confusing, with many factors to consider. In short, 3 main taxes will affect your life in Japan, namely:

• Income tax (shotokuzei 所得税)
• Residence tax (juuminzei 住民税)
• Consumption tax (shouhizei 消費税)

For the purpose of this article, we’ll focus on income tax. Companies in Japan are required to apply a withholding tax on their employees’ income. Basically, your income is automatically taxed each month before you even receive it. Of course, income from freelance work is also taxed, but you need to do it yourself.

Income tax for residents and non-residents

Your income is taxed differently depending on whether you are a resident (living in Japan long-term) or non-resident (those who earn an income through Japanese companies but don’t live in the country long-term).

• Residents pay between 5 and 45%, depending on income. This is in addition to a 10% residence tax.
• Non-residents pay tax at a flat rate of 20% on any Japan-based income.

2. Required Documents for Freelance Tax

So, we know freelancers have to submit their taxes by themselves. No need to worry though, just make sure you have the following documents:

• Japanese residence card (zairyū kādo 在留カード)
• My Number information
• Tax withholding slips from each company you work(ed) for
  For full-time workers, it’s called gensenchoshuhyou 源泉徴収票.
  For freelancers, it’s called shiharai chōsho 支払調書.
• Any other documents given to you by the companies you work for
• Receipts for all deductibles
  This is broad and can include all expenses related to your work. For example, if you work from home, you can deduct your rent and utility bills.
• Your banking information and/or bank book
  You might need to either make a payment – or receive one, if you’re lucky.

3. Where to Do Your Taxes

You have two choices – you can either do your taxes by yourself online, or you can go to your nearest tax office.

Online

You can file your taxes online for free here.

However, there are some cons to this method. Firstly, you would have to physically go to a tax office to set up an ID and password. Secondly, you have to track all your deductibles, expenses, and more on another platform to input the total amount in the free e-tax platform.

If you prefer a bookkeeping system that also lets you submit your tax return, consider FREEE or Money Forward. They offer monthly and yearly plans.

Please note that all three websites are only available in Japanese, but Google translate can usually help you overcome the language barrier.

At the Tax Office

Use Google Maps to search for your nearest tax office (each ward and city has its own) and simply take all your documents there. The staff may not be able to speak English, but they will understand the documents and how to process them. This is your best bet if you are somewhat unsure of what you’re doing, as you’ll get the assistance you need.

4. Other Tips

By now, you probably have a pretty good idea of what to do when tax season comes. Here are just a few more things to keep in mind:

• You should receive tax withholding slips from each company that employs you around December. If you haven’t received anything by early January, don’t hesitate to ask. Generally, companies will mail you your tax withholding slip. 
• Save any document that seems even remotely relevant as you receive it throughout the year, just in case you need it.
• Keep a spreadsheet of your monthly income to make things easier to calculate.
• If you go to the tax office, make sure to bring physical copies of documents.

Want to Know More About Freelancing in Japan?

Check out our ultimate guide for everything you need to know about freelancing in Japan.

Inbound Technology supports foreign freelancers working in the Japanese tech industry. Speak to one of our helpful advisors here or follow us on LinkedIn.